Allegion Q2 Earnings Beat on Americas Growth, Outlook Raised

Allegion’s revenues were $1.15 billion, which increased 12.7% year over year. Organic revenues increased 6.9%, driven by volume growth and price realization. Revenues beat the Zacks Consensus Estimate of $1.11 billion. While acquisitions/divestitures boosted revenues by 5.1%, foreign currency had a positive impact of 0.7%.

ALLE reports revenues under two segments. A brief discussion of quarterly results is provided below:

Revenues from Allegion Americas increased 11.8% year over year to $918.6 million. The figure accounted for 79.8% of the quarter’s revenues. Organic revenues increased 8.9%, driven by high-single-digit growth in the non-residential and residential businesses. Operating income for the segment was $266.8 million, up 12.8% year over year.

Revenues from Allegion International were $232.9 million, up 16.2% year over year. The metric accounted for 20.2% of the quarter’s revenues. Organic revenues decreased 1.2%. Segmental operating income was $14.8 million, down 5.7% year over year.

Allegion’s Margin Profile

In the quarter, Allegion’s cost of revenues increased 14.1% year over year to $634 million. Gross profit was $517.5 million, up 10.9% year over year, while the gross margin declined 70 basis points (bps) to 44.9%.

Selling and administrative expenses increased 6.5% year over year to $262.8 million. Adjusted EBITDA was $296.7 million, reflecting a year-over-year increase of 15%. The margin was 25.8%, up 50 basis points on a year-over-year basis.

Adjusted operating income increased 15.3% year over year to $278.8 million. The adjusted margin was 24.2%, up 50 basis points year over year. Interest expenses were $24.8 million, up 0.8% year over year. The effective tax rate (on an adjusted basis) was 19.7%, down from 20.7% in the year-ago quarter.

ALLE’s Balance Sheet and Cash Flow

While exiting second-quarter 2026, Allegion had cash and cash equivalents of $320.6 million compared with $356.2 million at the end of 2025. Long-term debt was $2.03 billion, higher than $1.98 billion at 2025-end.

In the first six months of 2026, ALLE generated net cash of $299.7 million from operating activities, reflecting a decrease of 4.6% year over year. Capital expenditure was $38.9 million compared with $38.8 million in the year-ago period. For the first six months of 2026, the available cash flow was $260.8 million.

Allegion repurchased shares for $160.6 million. Dividends paid out totaled $94 million, reflecting an increase of 7.1% year over year.

Allegion’s 2026 Outlook

The company has raised its 2026 revenue guidance. Allegion expects revenues to increase in the range of 7.5-8.5% year over year, higher than 6-8% projected earlier. ALLE now expects organic revenues to grow in the range of 3.5-4.5%, up from 2-4% expected earlier.

Adjusted earnings are now projected to be in the range of $8.85-$9 per share, higher than $8.70-$8.90 projected earlier. The company estimates available cash flow to be 85-95% of adjusted net income. Adjusted effective tax rate is projected to be approximately 18-19%.

Zacks Rank & Key Picks

The company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are discussed below.

The Gorman-Rupp Company GRC currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

GRC delivered a trailing four-quarter average earnings surprise of 17.6%. In the past 60 days, the Zacks Consensus Estimate for The Gorman-Rupp’s 2026 earnings has remained steady.

Applied Industrial Technologies AIT presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 4.0%.

The Zacks Consensus Estimate for AIT’s fiscal 2026 (ended June 2026) earnings has improved by a penny in the past 60 days.

Crane Company CR presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.3%.

In the past 60 days, the consensus estimate for CR’s 2026 earnings has increased by 0.3%.

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